Economic effects and political impacts: Assessing Western sanctions on Russia BOFIT Policy Brief 8/2018

Abstract

This brief assesses the effectiveness of Western sanctions on Russia, and their likely future impact.It examines the unique features of Russia as a sanctions target in the context of global sanctions experience. It then considers the goals that sanctions are intended to achieve, their impact so far, and the second-order effects of Russia’s responses. It concludes that, although the factors that typically correlate with sanctions success are absent, sanctions on Russia have nonetheless achieved important goals relatively quickly. Their impact will increase over time. Though speculative at this stage, recent oligarch sanctions and more stringent scrutiny may have significant consequences. They pose new and difficult choices for Russia’s business elite, much of which is dependent on the global economy. How oligarchs resolve these dilemmas has important implications for Russia’s domestic evolution.

Full text

BOFIT Policy Brief
2018 No. 8
Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland, BOFIT
Institute for Economies in Transition

BOFIT Policy Brief
Editor-in-Chief Riikka Nuutilainen
BOFIT Policy Brief 8/2018
9 August 2018
Nigel Gould-Davies: Economic effects and political impacts: Assessing Western sanctions on Russia
ISSN 2342-205X (online)
Bank of Finland
BOFIT – Institute for Economies in Transition
PO Box 160
FIN-00101 Helsinki
Phone: +358 9 183 2268
Email: bofit@bof.fi
Website: www.bofit.fi/en
The opinions expressed in this paper are those of the authors and do not necessarily reflect the views
of the Bank of Finland.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
3
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Contents
Abstract ................................................................................................................................................ 4
1. Introduction ...................................................................................................................................... 5
2. Sanctions in historical perspective ................................................................................................... 5
3. Russia’s position in the global economy ......................................................................................... 7
4. Sanctions and standards applied to Russia ....................................................................................... 9
4.2. Economic effects and political consequences ......................................................................... 11
4.2. Russian responses ................................................................................................................... 12
5. Elites and sanctions ........................................................................................................................ 15
6. Conclusions .................................................................................................................................... 19
References .......................................................................................................................................... 21

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
4
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Nigel Gould-Davies
Mahidol University International College, Thailand
Chatham House, London
Economic effects and political impacts: Assessing Western sanctions on
Russia
Abstract
This brief assesses the effectiveness of Western sanctions on Russia, and their likely future impact.
It examines the unique features of Russia as a sanctions target in the context of global sanctions
experience. It then considers the goals that sanctions are intended to achieve, their impact so far, and
the second-order effects of Russia’s responses. It concludes that, although the factors that typically
correlate with sanctions success are absent, sanctions on Russia have nonetheless achieved important
goals relatively quickly. Their impact will increase over time. Though speculative at this stage, recent
oligarch sanctions and more stringent scrutiny may have significant consequences. They pose new
and difficult choices for Russia’s business elite, much of which is dependent on the global economy.
How oligarchs resolve these dilemmas has important implications for Russia’s domestic evolution.
Keywords: Russia, economy, sanctions, trade flows, oligarchs
Acknowledgements: I would like to thank BOFIT and the Bank of Finland library for their
collegiality and support in researching and writing this paper. I would particularly like to thank Iikka
Korhonen, Riikka Nuutilainen, Heli Simola, Zuzana Fungáčová and Laura Solanko for their helpful
comments and suggestions. All remaining errors and omissions are mine.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
5
BOFIT Policy Brief 8/2018
www.bofit.fi/en
1. Introduction
In 2014 the United States and European Union imposed economic sanctions on Russia in response to
its actions in Ukraine. This marked a new phase in Western policy. Having sought, since the end of
the Cold War, to integrate Russia into the global economy, the West now began to limit Russia’s
access to it.
This also marked a new phase in the history of sanctions. Though used since ancient times,
sanctions were only widely recognised as a peacetime policy tool after the First World War. Since
the 1990s their use has expanded significantly, and after 9/11 potent new forms were innovated.1 But
the sanctioning of Russia is unprecedented. No state of its size and role has, in recent times, been
subject to major economic and financial restrictions. These include the application of measures
hitherto used only against “rogue states” and terrorist networks. Studying sanctions on Russia thus
offers lessons both for policy towards Russia, and for sanctions as a policy instrument.
Several studies have tried to measure and predict the economic effects of sanctions on Russia.2
But few have sought to assess their actual or potential political effectiveness. For the policy world this
is the key issue. Sanctions are not an end in themselves, but a means to achieve – usually with other
instruments – larger political goals. Rival views contend in policy and public debates, but their logic
and assumptions are rarely made clear. There is instead much “normative economics” that derives
analytical conclusions from policy preferences, rather than the other way round. Those who want to
punish Russia for its behaviour tend to argue that sanctions will be effective, while those who want
to improve relations argue the opposite.
This paper seeks to fill the gap in analysis of political consequences by addressing two
questions: How should we evaluate the effectiveness of sanctions? And how effective are they, and
are likely to be in the future?
Some of the most significant measures date only from 2017-18. Even their economic effects
are not yet clear. Assessing their political effectiveness – an inherently less precise and more
speculative task – is harder still. But we can draw upon precedent, logic and evidence to explore key
issues and arguments. Where it is too soon to offer answers, we can clarify the factors that might yield
them in due course. We should push analysis as far we legitimately can and no further, and be candid
about the limits of our knowledge.
This paper will first discuss major findings of the sanctions literature and, in this light, the
distinctive features of Russia’s role in the global economy. It will then examine the major sanctions
imposed on Russia and consider how their economic impacts may be transmitted into political
outcomes. It will conclude with implications for Russia policy and for sanctions.
2. Sanctions in historical perspective
Economic sanctions are “the deliberate, government-inspired withdrawal, or threat of withdrawal, of
customary trade or financial relations.”3 They are an instrument of foreign policy, distinct from
1 For the fullest account of the origin and significance of these new methods, see Zarate (2013).
2 For the most recent and comprehensive assessment, see Korhonen et al (2018).
3 The growing use of sanctions has spawned a large scholarly and analytical literature. The most important and
comprehensive work is Hufbauer, Schott, Elliott, and Oegg (2008). This section summarizes and interprets its main
findings. The definition of sanctions given here is from their Introduction, p. 3. For a similar discussion, see Biersteker
and Bergejik (2015).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
6
BOFIT Policy Brief 8/2018
www.bofit.fi/en
ordinary protectionist barriers (such as tariffs or quotas) erected for domestic economic reasons. What
can they achieve, how do they work, and what determines their success?
Sanctions are designed to support four kinds of foreign-policy goals. While most specific
sanctions measures aim to achieve more than one of these, it is helpful to clarify the distinct logic of
each.
1. Deter future behaviour. Sanctions aim to prevent the targeted state from carrying out further
unacceptable actions. They can deter in two ways. Deterrence by punishment changes incentives. It
imposes costs that convey resolve and carry the threat of stronger measures against further
transgressions. Deterrence by denial weakens capabilities. It imposes costs that make it materially
harder for the target state to take further unacceptable actions, even if it still intends to do so. A
familiar example is a technology transfer embargo.
2. Reverse past behaviour. Sanctions aim not only to prevent future actions, but to reverse
past ones. Here, their goal is not deterrence but “compellence”.4 Coercing a country to reverse an
action it has already taken is inherently harder than to persuade it not to attempt it in the first place.
Actions create new political realities, stakes and commitments. Even if a target state would have
avoided an action had it predicted the costly international response, this does not necessarily mean it
will reverse an action that unexpectedly provokes this.
3. Regime change. Here, the goal of sanctions is to achieve a change not just of policy but of
the political authority driving it. They threaten or impose costs so great that the government steps
down or is forced by popular pressure to do so.
4. Condemn transgression. Sanctions may be used to condemn unacceptable behaviour and
reaffirm violated norms and standards. This expressive purpose is akin to a sporting boycott or a
limited military strike. But such measures may have concrete, as well as symbolic, consequences if
they influence the perceptions, expectations and future behaviour of other actors.
In sum, sanctions “work” by deterring actions, reversing actions, undermining a regime, and
upholding principles of international order. The last of these functions is mainly symbolic (which is
not to say unimportant). The other three are instrumental: their efficacy derives from threatening or
imposing costs on the target state that exceed the benefits it derives from its sanctioned behaviour.
For sanctions to succeed, compliance with their demands must be preferable to defiance of them.
How likely is this condition to be fulfilled? The most comprehensive and influential study concludes
that they have been “at least partially successful” 34% of the time.5 But this is an average score
derived from analysis of 115 cases since 1914. What factors influence the probability that a specific
sanctions measure will succeed? Five factors stand out:
Goal. As with any instrument, the more ambitious the goal of sanctions, the less likely they are
to succeed. Sanctions are most effective in inducing modest policy change, and least so in stopping
military action or bringing about regime change – though there are successful cases of both.6
Prior relationship. Sanctions are more likely to be effective if “sender” and “target” states
were previously partners rather than adversaries, especially if they enjoyed a strong trading
relationship.7 A strong prior relationship sensitises the target – sanctions are an unwelcome
development to be resolved, not an expected one to be borne – while a high level of trade makes the
target economically more vulnerable.
4 For the classic statement of this distinction, see Schelling (1966).
5 Hufbauer et al (2007).
6 See Hufbauer et al (2007). See also UN Targeted Sanctions Consortium (2013), which finds that sanctions intended to
constrain or signal targets are nearly three times as effective (27-28% of the time) as sanctions intended to coerce a change
in behaviour (only 10% of the time).
7 “Sender” refers to the state, or states, applying sanctions. “Target” refers to the state against whom these are applied.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
7
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Target state’s regime. Sanctions are more likely to succeed against democratic than
authoritarian regimes. The latter are better able to distribute the domestic costs of sanctions, and thus
to prevent economic discontent from becoming a political threat.
Nature and timing of sanctions. Sanctions may target trade or financial flows. Export
embargos have traditionally been the dominant form. But recent evidence suggests that financial
sanctions, on their own, are almost as effective as a full combination of trade and financial
restrictions.8 Furthermore, this finding emerged just as the United States was innovating potent new
forms of financial sanctions after 9/11. It is therefore very likely that the contemporary significance
of financial sanctions is greater still.
Timing also matters. Sanctions are typically most effective when they impose high early costs,
creating a shock effect that their target will struggle to withstand. Conversely, if applied slowly and
incrementally, the target will find ways of building resilience. Sanctions policy advice is “slam the
hammer, don’t turn the screw”.9
International support. Sanctions are more effective if the sending state builds wide
international support for their implementation – so long as this is not won at the price of diluting
sanctions and undermining their efficacy. Conversely, if other countries are willing and able to supply
sanctioned goods and services to the target, sanctions are less likely to be effective.
Imposing sanctions on Russia, then, might appear an unpromising endeavour. Sanctions have
been applied in response to major policies that will be very difficult to reverse; the prior relationship
between Russia and the West was poor; Russia has a highly authoritarian regime; and Russia is a
major power that will be impossible to isolate. All the correlates of sanctions’ success are absent.
But there is more to say. While statistically significant, the correlates of sanctions’ effectiveness
explain only 15-24% of variation in outcomes. Reliable prediction of sanctions’ efficacy in any
individual case “still lies beyond the grasp…of current political and economic theories”.10 There is
no substitute for detailed study of Russia itself, its distinctive position in the global economy, and the
specific sanctions that have been applied to it.
3. Russia’s position in the global economy
This is not the first time the West has imposed sanctions on Russia. During the Cold War, transfer of
militarily useful technologies to the Soviet bloc were restricted by the Coordinating Committee for
Multilateral Export Controls (CoCom). In 1974 the US Congress passed the Jackson-Vanik
Amendment that linked normalisation of trade relations to Jewish emigration from the Soviet Union
– a measure repealed only in 2012. Among other significant sanctions, the United States halted grain
exports to the Soviet Union following the invasion of Afghanistan in 1979, and imposed sanctions on
the building the Trans-Siberian gas pipeline two years later in response to martial law in Poland.
In different ways, each of these precedents highlights how political divisions can arise when
applying sanctions: between president and Congress in the case of the Jackson-Vanik amendment;
between a major interest group (farmers) and the government in the case of the US grain embargo;
and between the US and European allies in the case of pipeline sanctions. Such lessons are relevant
to sanctions policy today. But overall, sanctions played a relatively minor role in the Cold War. The
Soviet Union’s avowedly anti-market state socialism supported few economic ties with the West. It
permitted no private foreign investment, and “traded” (in fact, bartered under inter-state agreements)
largely within the autarchic communist bloc. The major exceptions were, from the 1960s, oil sales
8 Hufbauer et al (2007), pp. 168-70.
9 Hufbauer et al (2007), 168.
10 Hufbauer et al (2007), pp. 188-92.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
8
BOFIT Policy Brief 8/2018
www.bofit.fi/en
and grain purchases, and, from the 1970s, foreign loans. Such ties became systemically significant.11
But the main constraint on a deeper economic relationship remained the state socialist system, not
Western sanctions. Today, by contrast, sanctions, not ideology, are the main constraint on Russian-
Western relations.
Five features define Russia’s position in the global economy and hold implications for the
impact of sanctions. First, Russia is the world’s 6th biggest economy (measured in terms of purchasing
power parity, PPP). No large economy has ever been subject to significant sanctions, with two partial
exceptions. In 1935, Italy, the 8th largest economy at the time, was sanctioned by the League of
Nations following its invasion of Abyssinia. But major powers did not apply restrictions on oil sales
effectively, rendering sanctions ineffective. Then in 1940 the United States froze Japanese assets and
suspended oil sales to Japan, then the 7th largest economy. In this case, the sanctions were so severe
that they may have pushed a desperate Japan towards war with America. There has been no
comparable case in the post-war period.
Second, Russia’s trade dependence is limited, with a trade/GDP ratio at around 40%.
Furthermore, most of Russia’s trade consists of raw material exports, above all oil and gas. This is
fundamentally important not only to Russia but to global energy markets. This makes an oil and gas
export embargo on Russia, as was practised on Iraq and Iran, unthinkable. The participation of major
Western companies in some of Russia’s most significant oil and gas projects also militates against
such a move.
Third, as a major power Russia cannot be isolated in the way that smaller sanctions targets have
been. Even if America and Europe maintain a common sanctions position, Russia will be able to turn
to relationships elsewhere – notably with China, now the world’s biggest economy (in PPP terms).
Fourth, as an assertive power Russia has the motivation, as well as means, to retaliate with
measures of its own. While trade disputes often involve tit-for-tat tariff hikes, sanctions targets, being
so much smaller than sending states, have rarely responded with “counter-sanctions”. But just as
sanctioning states cannot contemplate an embargo on Russian energy, so Russia cannot afford to
disrupt supply to major customers, given its heavy dependence on these revenues. Neither side can
afford to disrupt the major part of their trading relationship. In this, a compelling mutual self-interest
binds them. Any serious attempt to disrupt it would not merely invite a severely costly response, but
be inherently self-harming.
The fifth feature of Russia’s position is that a significant part of its economic elite is more
closely tied to, even dependent on, the global economic and financial system than the country as a
whole. This has not generally been true of other sanctions targets, especially recent cases such as Iran,
Libya and North Korea.
These features of Russia’s global economic position in turn imply three things about the
potential effectiveness of sanctions on it. First, Russia’s economic size, limited exposure to global
trade and critical role as an energy supplier mean that the economic effects of feasible trade
restrictions, while real, will be limited. Traditional trade sanctions alone will at most impose chronic
pain, not acute crisis, and are unlikely to achieve major political outcomes. Demanding that they do
is an unrealistic test of sanctions efficacy.
Second, Russia can retaliate with sanctions of its own to undermine the political will to maintain
those imposed on it. Sending countries thus face additional costs, beyond those arising from the
sanctions they impose, which will need to be politically managed.
Third, the high degree of Russian elite exposure to Western economies introduces a novel
element. Elites are usually well placed to shift hardship onto the wider population. For this reason,
sanctions elsewhere have been criticised for harming ordinary citizens most and those close to power
11 For an excellent account, see Gaidar (2007). For a spirited revisionist argument, see Sanchez-Sibony (2014).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
9
BOFIT Policy Brief 8/2018
www.bofit.fi/en
least, prompting design of “smart sanctions” to target powerful individuals rather than populations.
Will Russian elites’ capacity to avoid sanctions costs be sufficient to match the scale of their
vulnerability, especially if “smart sanctions” honed against other countries are applied to them? At
the very least, the relatively globalized character of Russia’s economic elite raises the prospect that
significant sanctions effects could be exerted through it.
By looking first at broad lessons from the history of sanctions, and then at the distinctive
features of Russia’s own position, we now have some fruitful lines of enquiry into the prospects and
limits of sanctions on Russia. We can now consider the specific measures applied against Russia since
2014, examine their direct economic effects, and consider their political effectiveness.
4. Sanctions and standards applied to Russia
Since 2014 the United States, European Union and several other states have imposed a range of
sanctions on Russia.12 Their aim was not to compel Russia to reverse its policy by ending its
intervention in Ukraine and returning Crimea. Rather, they were intended to achieve three goals. First,
to deter Russia from escalating its military aggression. Second, to condemn violation of international
law and European norms by making clear there could be no normal relationship with the violator.13
Third, to encourage Russia to agree a political settlement by increasing the costs of its behaviour.
Sanctions have escalated over time and varied slightly among sender countries. For the purpose
of analysing their political-economic significance, it is helpful to distinguish several features:
Targets. Sanctions have targeted individuals and sectors. Individual sanctions (in the case of
the United States, Special Designated Nationals (SDNs)) prohibit transactions with named state
officials, heads of key state companies and, later, heads of major private companies.
Sanctions on key economic sectors have banned sales of military and dual-use technologies.
They have restricted all but very short-term financing to the financial services and energy sectors (and
have since further tightened permissible loan maturity to 14 days for financial services and 30 days
for energy). And they have prohibited participation in oil projects that involve deep water (over 150
metres), Arctic offshore and shale exploration and production (the United States later expanded these
to include any such project in which a Russian company has a substantial interest, whether or not in
Russia). The 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA) also
provides for sectoral sanctions on railway, metals and mining sectors. Though not so far imposed,
their inclusion among potential measures signals that sanctions could be significantly widened.
Scope: EU sanctions on Russia apply to EU citizens and EU-registered companies and
organizations. The reach of U.S sanctions goes much further. The 2014 Ukraine Freedom Support
Act provides for the United States, at presidential discretion, to impose secondary sanctions on
foreign entities that violate U.S. sanctions on Russia. CAATSA made these sanctions mandatory.
Any individual or company around the world now faces severe U.S. financial restrictions unless it
complies with America’s own sanctions on Russia. 14 This is not the first time America has sought to
give sanctions extra-territorial force. In 1981 it tried (through the Commerce Department) to exercise
this power to prevent European companies helping to build the Trans-Siberian pipeline.15 After 9/11
the US Treasury innovated powerful financial sanctions, based on the dollar’s status as a reserve
12 Other states imposing sanctions include Canada, Australia, New Zealand, Switzerland, Norway, Iceland, Montenegro,
Albania and Liechtenstein.
13 For a good discussion, see Christie (2016).
14 Specifically, the Ukraine Freedom Support Act of 2014, as amended by CAATSA, prohibits or restricts correspondent
accounts or payable-through accounts by foreign financial institutions that violate sanctions.
15 Perlow (1983).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
10
BOFIT Policy Brief 8/2018
www.bofit.fi/en
currency. This enabled America to exert “strategic suasion” on actors around the world to comply
with U.S. sanctions on terrorist networks, and later on Iran, Libya and North Korea.16
Duration. While EU sanctions, must be renewed unanimously every six months, CAATSA
transferred substantial power to impose and lift sanctions from the president to Congress. This reduces
the likelihood that, even in the most optimistic scenario, sanctions will be lifted soon. Recall that the
Jackson-Vanik amendment, passed despite executive resistance, was in force for thirty-eight years.
On 6 April 2018 the United States unilaterally imposed further sanctions, this time without prior
EU co-ordination. These sanctions designated seven major oligarchs and their companies, as well as
seventeen senior government officials (the latter include Gazprom CEO Alexei Miller, despite
sectoral sanctions not covering the gas industry). The harshest words and measures were reserved for
Oleg Deripaska and eight companies he owned or controlled, including Rusal, one of world's largest
aluminium producers. As a result, he and they were largely cut off from the global economic and
financial system, triggering prices crashes of company stock, disruption of aluminium markets and
board resignations. They demonstrated America’s structural power: its unrivalled ability, by virtue of
its key role in the global financial system, to impose severe costs on its targets.
Two further features of the 6 April sanctions are worth noting. First, they were justified not as
a response to specific Ukrainian events but a broader “pattern of malign activity around the globe”
that explicitly referred to a range of Russian policies, including cyber-hacking, electoral interference,
Syrian intervention, as well as occupation of Crimea and intervention in eastern Ukraine. The
rationale given for targeting oligarchs was that those “who profit from this corrupt system will no
longer be insulated from the consequences of their government's destabilizing activities”.17 The
breadth of this critique makes it unclear what actions, even in principle, Russia could take to have
sanctions lifted. This reinforced the sense that they were here to stay. Second, the mix of targets
chosen, from a much wider range of possible candidates, highlighted the unpredictability of these
sanctions, and raised the prospect that other individuals could be added at any time.18
Finally, Western countries are now scrutinising incoming foreign wealth more closely. Though
this applies to money from any source, it is motivated primarily by concerns about Russia. The UK
in particular, Russians’ favoured destination for their wealth, is moving towards higher standards of
probity and transparency of money flowing into Britain. These measures include scrutiny of investor
visas and the use of Unexplained Wealth Orders that require investors to prove the legitimate origins
of their wealth. Especially significant was Britain’s decision in April 2018 to require the Overseas
Territories it governs to set up public registries of beneficial company owners by 2020.19 These
lightly-regulated jurisdictions are a favoured destination for those wishing to conceal their wealth,
including an estimated £68bn of Russian money over the past ten years.20
In sum, since 2014 sanctions have escalated, expanded and hardened. Measures hitherto applied
to terrorist networks and “rogue states” are now applied to major business people and internationally-
listed companies of one of the world’s biggest economies. The US Treasury’s Office for Foreign
Assets Control (OFAC) has innovated a new category of sanctions, the Sectoral Sanctions
16 Zarate (2013) provides the most comprehensive insider account.
17 US Treasury (2018). Even the otherwise sweeping CAATSA had referred to compliance with the Minsk accords as a
reason for waiving sanctions. The imperfect but convenient shorthand “oligarch”, used by the U.S. Treasury, is used in
the present paper.
18 The inclusion of Viktor Vekselberg, an oligarch with a low public profile, evoked particular surprise. Soon after he was
sanctioned, it became known that he had been questioned by the Mueller investigation two months earlier. Media reports
also linked one of his companies with payments to President Trump’s lawyer, Michael Cohen. This suggested to some
that sanctions targeting may have been informed by the Mueller investigation. See, for example Washington Post (2018).
19 Financial Times (2018b).
20 Global Witness (2018).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
11
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Identifications (SSI).21 Key Russian individuals and sectors face an international environment that is
far more stringent, restrictive and unpredictable than ever before.
4.2. Economic effects and political consequences
What are the effects of Western sanctions on Russia?22 While difficult to disentangle from the impact
of lower oil prices, estimates suggest that from 2014-2017 sanctions reduced GDP by 2-2.5%.23 The
Russian economy is projected to grow by 1.5-1.7% a year to 2023. This is substantially lower not
only than global growth (3.7-3.9%) but growth of other developed countries (1.5-2.5%). Even the rest
of the Commonwealth of Independent States will grow substantially faster (3.5-3.9%).24 Russia is
thus very unlikely to achieve Putin’s goal of exceeding the global growth rate, described in his 2018
address to the Russian parliament as a “fundamental condition for a breakthrough in resolving social,
infrastructure, defence and other tasks”.25 This failure will accelerate relative decline and, other things
being equal, bring forward difficult policy choices
As predicted earlier, Russia’s size and role in the global energy industry mean that overall
sanctions costs are real but limited. But their intent was never to cause a rapid decline in GDP. This
is rarely how sanctions even on smaller and more vulnerable targets have worked. It is not how the
effectiveness of Russia sanctions should be assessed.
More significant is the impact of sanctions on their direct targets, the energy and financial
sectors. International oil companies (IOCs) have shelved greenfield development plans, depriving
key state companies of Western partners. In 2014, Shell suspended plans to develop the Bazhenov
shale with Gazpromneft. ExxonMobil has suspended participation in multiple projects envisaged in
its 2011 framework agreement with Rosneft. This implies that up to $500bn in planned investment
will be foregone – and, more significantly, technology and skills that only IOCs can currently
provide.26 The fact that Exxon announced these project halts only in 2018 suggests the full
consequences of sectoral sanctions are still working themselves out.
Gazpromneft will seek to develop shale oil on its own, but the absence of a Western partner is
likely to mean a delay of at least five years. The impact on Arctic and deep offshore development
will be more severe. Investment, technology, expertise and project development lost today mean
future growth foregone. Thus, while the West cannot embargo Russia’s energy exports, it can hinder
its future productive capacity. In contrast to many previous, trade-focused sanctions cases, the effects
of sanctions on Russia are likely to cumulate rather than diminish over time. In early August, the
Secretary of the Russian Security Council Nikolai Patrushev, told regional heads that Western
sanctions had “identified the problem of vulnerability and dependence of the domestic energy sector
on foreign capital and technology”, creating “serious problems” in the oil and gas sector.27
Unsurprisingly, Russia’s relationship with the global economy has weakened due to sanctions.
Lending from all major countries “has declined, in many cases radically”.28 Foreign bank exposure
and FDI inflows have both halved since 2013. Since 2013, too, the proportion of Russian interbank
loans and deposits outside the country has fallen from 60% to 37%. In their most important foreign
21 On this innovation, see Skadden (2015).
22 This paper focuses on present and future welfare implications. For a wider range of effects, see Korhonen et al (2018).
23 Gurvich (2018).
24 IMF (2018), pp. 240-44.
25 Putin (2018).
26 Reuters (2018a).
27 Interfax (2018).
28 Korhonen et al (2018), p. 20.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
12
BOFIT Policy Brief 8/2018
www.bofit.fi/en
location, the UK, they have fallen from 24% to 11%.29 A wave of Russian companies has delisted
from the London Stock Exchange, hitherto the most attractive foreign exchange for them. The
exception proves the rule: the 2017 flotation of Deripaska’s EN+, the biggest Russian listing since
2012, was conducted in part to avoid sanctions: much of the capital raised was used to repay a loan
to VTB, a sanctioned entity.30
What have been the political consequences of these economic effects so far? Russia has not
reversed its behaviour: it still occupies Crimea and continues to intervene militarily in eastern
Ukraine. Nor have sanctions led to regime change. But they were neither intended nor expected to do
either. As we have seen, sanctions were imposed to encourage Russia to reach a political settlement;
to deter military escalation; and to reaffirm principles of international order. How have these goals
fared?
At key moments, sanctions appear to have curbed Russian escalation. In particular, as Stanislav
Secrieru has argued:
The second wave of sectoral sanctions in September 2014 stopped Russia’s offensive against
almost defenceless Mariupol. The threat of new sanctions impeded the full legitimisation of the
separatists’ political structures in Donbass: at the last moment, Russia refrained from recognising
the results of the November 2014 ‘elections’ in DNR and LNR.31
Even some who call for sanctions to be modified acknowledge this.32 Russian restraint appears
to have been induced not so much by sanctions already imposed, but by the credible threat of more
severe measures.33 As with all deterrence, it can be hard to establish why something did not happen,
and other factors were present, including the unexpected strength of Ukrainian ground forces. But
this merely highlights the fact that sanctions are rarely the sole instrument used to achieve a goal. The
key point is that, as noted earlier, the deterrent function of sanctions works in part by instilling
expectations of future costs if unacceptable behaviour escalates. This is effective because the West
enjoys “escalation dominance” in economic conflict: a menu of measures, such as debt sanctions and
isolation from the global payments system, to which Russia would struggle to respond.
Sanctions have also powerfully signalled international condemnation of Russia’s behaviour.
Since they have been costly to sender countries, they are more significant conveyors of resolve than
mere verbal condemnations. The cohesion they have instilled has supported subsequent actions,
notably the unprecedented co-ordinated expulsion of 150 diplomats following the Novichok nerve
agent attack in Salisbury.
Sanctions have not succeeded in the third and most ambitious goal of inducing Russia to reach
a political settlement. The Minsk agreements have not been implemented. Actions such as Russia’s
recognition of identity documents issued by the Donetsk and Lugansk People’s Republics, make
fulfilment appear remote.
4.2. Russian responses
Russia has responded to sanctions in four ways: adaptation, evasion, avoidance and retaliation. These
have produced important second-order effects, which must be factored into assessment of the
consequences of sanctions.
29 IMF (2017), Table 7 p. 35.
30 Only two Russian companies now have full listings. The number with a secondary listing has fallen from 67 in 2011 to
44 in 2018. See Financial Times (2017).
31 Secrieru (2015). On sanctions’ effectiveness in curbing Russian escalation in Ukraine, see also Christie (2016).
32 Fischer (2017).
33 Bloomberg (2014).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
13
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Adaptation. As any state suffering an external shock would do, Russia has used policies and
resources to limit the impact of sanctions. Directly and indirectly, the state has bailed out vulnerable
banks and companies.34 Four years on, the state is offering new forms of support through credit lines,
reinsurance, possible nationalisation of sanctioned assets etc. 35 However, the terms of such support
may not always be welcome to oligarchs.36
In July 2018, after lobbying from the Russian Union of Industrialists and Entrepreneurs (RSPP)
to provide “systemic support to victims of sanctions”, the government drew up a comprehensive plan
to combat the impact of sanctions, and set up a working group to co-ordinate this. The plan will be
rolled out in coming months.37 It includes:
• ways to reduce use of the dollar in foreign trade payments.
• ending fines on sanctioned companies for not returning hard currency to Russia;
• ways to support access of sanctioned companies to the domestic financial market
• further import restrictions on foreign goods
• “Special Administrative Regions” for companies to re-register, allowing them not to
reveal ownership structure (the government has been withholding some data about state
procurement since late 2017).38
• financial sanctions on Ukrainian officials and other individuals
• measures to reduce dependence on foreign patent holders
The new sanctions era has also heightened Putin’s long-standing preoccupation with reducing
external financial vulnerability, driving an even more conservative fiscal policy. A 2% VAT tax rise
is planned for 2019 despite a projected budget surplus and ratings upgrade back to investment grade.
Russia’s reserves are also climbing back towards $500bn, with a steadily higher proportion of them
held in gold. There are also signs of “anticipatory adaptation” to reduce exposure to further potential
sanctions. Since the April 6 US sanctions, Russia has sold 80% of its US Treasury bonds, possibly to
pre-empt a potential asset freeze.39
The sanctions prohibition on providing anything more than short-term financing has added to
oil companies’ transactions costs, but not fundamentally constrained their ability to conduct day-to-
day financial operations.40 The IMF assesses that “most corporates have enough foreign exchange to
cover their short term external debt obligations”.41
Evasion. Russia is seeking ways to induce Western companies to violate sanctions, knowingly
or not, and so undermine their implementation. Proposals are being drafted to allow companies to
conceal their ownership structure and details of their agreements. The government is also exploring
the creation of a “cryptorouble” to conceal payments.42 But these measures may have adverse
consequences. In particular, by making parts of the economy less transparent they will reduce the
34 A notable example was Rosneft’s financing by Otkritie Bank, Russia’s biggest private lender, in late 2014 to meet debt
servicing needs (Otkritiye has itself since been rescued by the Central Bank).
35 Reuters (2018d). For example, support for Renova is being provided by Promsvyazbank, which was taken over by the
Central Bank in December 2017. Promsvyazbank is also being used to protect defence procurement from sanctions risk.
See Reuters (2018c) and Vedomosti (2018e). From 2014-16 five large SOEs were also forbidden from to increasing their
net foreign assets.
36 Vedomosti (2018f).
37 Kommersant (2018), Vedomosti (2018a), Vedomosti (2018g), Vedomosti (2018h).
38 The Central Bank does not want banks and other financial institutions to be allowed to register in such a zone, as this
could undermine financial stability.
39 US Treasury figures give aggregate holdings by Russian residents and do not distinguish between Central Bank,
commercial banks and others.
40 Reuters (2017b).
41 IMF, (2018), p. 6.
42 RBK (2018b). On Russian plans to develop a cryptorouble, see Financial Times (2018a) and Time (2018).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
14
BOFIT Policy Brief 8/2018
www.bofit.fi/en
attractiveness of Russian companies to investors, both within Russia and from countries not imposing
sanctions.
In any case, given the risks that companies face, especially from US secondary sanctions,
evasion is unlikely to work on a significant scale. The $2m fine of ExxonMobil in July 2017 (for
agreements signed with Rosneft when then-Secretary of State Rex Tillerson had been Exxon CEO)
illustrated the risks. Siemens halted sale of gas turbines when it emerged these were being transferred
to Crimea. Dutch prosecutors are investigating alleged participation of companies in the building of
the Kerch bridge. Some EU companies appear to be using local subsidiaries and third parties to breach
the spirit, if not the letter, of sanctions law.43
Avoidance. Russia seeks to mitigate sanctions by finding other partners to replace Western
ones. China and the Middle East are increasingly important sources of finance. China stepped in to
support the Yamal gas project, enabling Russian to showcase it as a successful defiance of sanctions.
In a complex and opaque deal, Qatar’s sovereign investment fund, the QIA, acquired an 18.93% stake
in Rosneft for over $10bn. But since Chinese investment, in this and other projects, takes the form of
specific project financing approved by national authorities, rather than free capital, it cannot perfectly
substitute for Western finance. Nor are there clear non-Western sources of sanctioned energy
technology and expertise.
Sanctions thus hasten Russia’s movement towards non-Western countries, especially China.
Given the more general deterioration in Russian-Western relations, closer ties were inevitable. But
Russia is now much more the economic demandeur, allowing China to shape their deepening
relationship on more advantageous terms. The commercial terms of the May 2014 Sino-Russian gas
supply agreement, agreed after a decade of negotiation in the wake of Russia’s annexation of Crimea
and the imposition of the first Western sanctions, set a trend that will continue.
Retaliation. As noted earlier, Russia is unusual in having the means and motivation to respond
to sanctions in kind. Russia’s “counter-sanction” ban on Western food imports was designed partly
to inflict costs that might weaken Western resolve.44 This ban has since boosted Russian agriculture,
but also raised consumer food prices, hurting poorer citizens who spend a higher proportion of income
on food.45 It has become part of Russia’s longer-term import substitution policy, and seems unlikely
to be lifted quickly even if the West eases sanctions. This ban has the character of semi-permanence.
Currently the ban is set to run until the end of 2019, so it is completely delinked from those EU
sanctions that are renewed every six months, for example.
Some suggest that import substitution strengthens the Russian economy, pointing, for example,
to the rapid growth in Russian wheat exports.46 A few Russian voices have even “thanked” the West
for making Russia stronger and more self-reliant. There arguments are doubtful. Self-sufficiency that
substitutes for mutually-beneficial market exchange is always a less efficient, second-best solution.
The import ban does not cover cereals, so could not have stimulated domestic production.47 In any
case, imports of all agricultural products from the EU, whether sanctioned or not, fell substantially
after 2014 – a consequence of falling incomes and sharp ruble depreciation.48
43 See Reuters (2016) and Reuters (2018b).
44 Hedberg (2018) argues that these sanctions were carefully crafted “to cause greater economic damage to states the
Kremlin has long viewed as promoters of policies that undercut its interests”.
45 Gurvich calculates that Western sanctions have caused average household costs to rise by 2000 rubles, and that the
food import ban has added a further 450 rubles to this. Gurvich (2018). Analysts at the Russian Central Bank calculate
that overpayments by consumers to producers of food have more than doubled since 2014. Vedomosti (2018c).
46 See, for example, Granville and Mau (2018).
47 The boom in Russian wheat exports is the result of a weaker rouble, good harvests, government financial support, and
the belated effects of liberalisation of land holdings.
48 Korhonen et al (2018).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
15
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Further “counter-sanctions” proposed in the Russia Duma, such as a ban on titanium exports,
were severely criticised by business as harmful to its interests, and subsequently withdrawn. The
Duma also watered down a draft law that, by punishing implementation of Western sanctions, would
have further discouraged foreign investment. Russia’s ability to retaliate in kind to sanctions is, in
practice, limited.
In sum, Russia’s responses to sanctions are producing further consequences. They will reshape
the psychology and reality of Russia’s political economy and foreign relations. The state’s role in the
economy will grow further, leading to greater inefficiency and corruption, less transparency and lower
growth. Russia will become closer to China, but on less favourable terms. And Russia will become
more isolated from the West. As Evsey Gurvich, head of the Economic Expert Group, puts it:
growing isolation will inevitably result in prolonged stagnation [zastoi] of the Russian
economy, which will lose its international positions: developing market countries will start to catch
up and overtake us, and developed countries will move further ahead in technological development.49
Gurvich’s use of “zastoi” here implies comparison with the Brezhnevite “era of stagnation”
described in a similar way.
5. Elites and sanctions
Russia is highly unequal: its economic elite holds a larger proportion of national wealth than in most
countries. This elite is also far more exposed to the global economy than Russia as a whole. Some of
the most potent sanctions – measures previously applied to terrorist networks, and states deemed
“rogue” – are now targeted at some of the wealthiest members of this elite. Others know they could
face them too. What will be the political impact of these sanctions?
While it is too soon to forecast their consequences reliably, we can identify the range of possible
outcomes, and factors that will shape these, by asking two questions: How is the business elite
affected by sanctions? What choices are available to it?
Unlike any previous elite in Russian history, most oligarchs are highly dependent on access to
the global economic and financial system. There are several strands to this relationship:
• Revenue: sales of output to world markets. This still mainly comprises raw materials
exports to Western countries;
• Corporate finance: access to Western financial markets to raise capital through IPOs or
loans;
• Security: the use of financial, legal and related services to store and protect wealth. This
also includes the use of Western (primarily English) law to conclude agreements, and
Western courts to arbitrate business disputes between Russian businessmen;
• Consumption: personal access to Western societies for residence, shopping, personal
enjoyment, children’s education, etc.
While these purposes – making money, securing investment, protecting assets, and spending wealth
– are distinct in principle, they may blur in practice. For example, securing a Western loan or stock
market listing may serve a “security” purpose by helping to legitimise reputation or protect assets
from Russian or other authorities.50 Similarly, buying property in Western countries can be a way of
both protecting and consuming wealth.
49 Gurvich (2018).
50 The US Treasury’s April 6 designations, especially against Oleg Deripaska and his companies, have notably weakened
this device Deripaska has a history of using Western financial systems in this way. The most recent example was the
November 2017 EN+ flotation on the London Stock Exchange.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
16
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Oligarchs and their companies use each of these relationships to different degrees. For example,
as noted earlier, raw materials sectors depend on exports to a degree that newer sectoral sources of
great oligarchic wealth, such as retail, do not. Being capital intensive, their financing needs are also
more likely to exceed retained earnings and other domestic sources, and so require international
financing. Individual oligarchs also differ in the amount of time and money they personally enjoy
spending abroad. For example, when renewal of Roman Abramovich’s UK investment visa was
delayed, he quickly acquired an Israeli passport that would enable him to return to Britain.
The most important and widely used of the four functions is the third one: “security”. Easy
access to Western economic, financial and legal services has become a key means of protecting elite
interests, and thus a major part of Russia’s political economy. From 2003, when Putin reasserted
political dominance over oligarchs and their businesses, he indicated that they would be allowed to
operate as long as they did not try to interfere in questions of governance. But weak institutions and
rule of law incentivised businessmen (not only the big oligarchs) to send money out of the country,
even as their businesses became increasingly profitable.
Putin tolerated this, and even found uses for it. Like all important business decisions, major
investments overseas required the Kremlin’s consent. Such ties could be used to cultivate influence
in Western commercial and political circles. But as Putin began his third presidential term in 2012,
and his attitude towards globalization darkened, he became increasingly critical of large annual
capital outflows. His demands for capital repatriation, though, were largely ignored. On the contrary:
capital flight spiked in Q4 2014 following the collapse of Russian-Western relations, despite a sharp
fall in the oil price that ceteris paribus would, by reducing earnings, normally lead to a decline in
capital outflow (as there are less liquid funds to flow out).
Stronger sanctions and stringent standards thus disrupt arrangements that oligarchs have long
enjoyed, changing their calculations and forcing unfamiliar choices on them. But while the West is
becoming a harder place, Russia is not becoming an easier one. On the contrary: recent cases suggest
it is now a more unpredictable environment for business – possibly as a consequence of sanctions
provoking a harsher struggle for a smaller pie. 51 The oligarchs cannot come to an accommodation
with the West, as they could with Putin in 2003. Indeed, many worry that efforts to lobbying against
sanctions might only intensify unwelcome attention. Three options are available to them.
1. They can settle outside Russia. This involves giving up any significant role in Russian
business life, though they would preclude business activity elsewhere. A few took this step before
sanctions. In the past year, a few more have chosen to sell their assets, though it is not yet clear
whether they will stay in Russia or emigrate.52
2. They can deepen their relationship with the Russian state. This involves seeking
compensation for the effects of sanctions and repatriating the wealth held overseas. Putin has long
called for money sent overseas to return to Russia, but has not been able to persuade or compel this
on any significant scale. Indeed, his “de-offshorization” was, if anything, counter-productive,
encouraging some oligarchs to become non-resident – leaving Russia, rather than returning their
money. Putin’s message is now, in effect, “I told you so”. Sanctions and scrutiny, he argues, show
that the West is unwelcoming and cannot be trusted; business people should therefore bring
51 The Ulyukaev, Yevtushenkov and Magomedov cases are only most high-profile recent examples of prominent figures
losing liberty or assets. Boris Titov’s efforts, mentioned below, to encourage fugitive business people to return has
foundered on skepticism about assurances of safety.
52 A recent example is the sale by Sergei Galitsky of nearly all of his Magnit retail chain, despite retail being less directly
vulnerable to Western sanctions. Galitsky had made “the biggest fortune in Russia that's not derived from natural
resources”. See Bershidsky (2018).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
17
BOFIT Policy Brief 8/2018
www.bofit.fi/en
themselves and their wealth back to Russia.53 Boris Titov, presidential ombudsman for entrepreneurs’
rights, has sought to facilitate the return of wealthy Russians who have fled from criminal cases.54
3. They can try to influence policy. This involves arguing privately within counsels of state to
moderate or halt the behaviour that leads the West to impose and maintain sanctions that harm core
oligarch interests.
We have seen that oligarchs are not uniformly impacted by sanctions. They may also vary in
their responses. And the three options outlined above are not mutually exclusive.55 In particular, a
supple combination of 2. and 3. is plausible: demonstrative public loyalty that helps oligarchs exert
quiet influence more effectively.
But each approach has drawbacks. Emigration entails a personal sacrifice of home country
ambitions, networks and culture that may be too heavy for many – even assuming oligarchs can, in
the new climate, find an attractive place to settle without unwelcome scrutiny. Nor is it clear how
safely and completely they can cut their ties with Russia. In some cases it appears that emigrant
oligarchs have chosen, or been required, to serve Kremlin functions overseas.
The second option, repatriation, carries risks. Capital flight has been a persistent feature of the
Russian economy precisely because those who have acquired wealth in Russia understand that it is
better kept elsewhere. Caught between a less-welcoming West and still-insecure Russia, oligarchs
might seek to move wealth to other jurisdictions, such as Singapore and Hong Kong, which they have
largely ignored until now.56 If these are insufficiently safe and attractive – everywhere is potentially
vulnerable to U.S. secondary sanctions57– and oligarchs conclude that Russia is now the least-bad
option, they will face the uncertainties that have until now impelled capital outflow. There is no
evidence that asset security and the rule of law have strengthened – if anything, recent cases suggest
the contrary. Whether and how returning capital would be taxed remains unresolved. Government
and business alike are exploring ways to facilitate repatriation through “oligarch bonds”, “internal
offshores” and other mechanisms. But at best these would ease return of assets, not ensure its security
thereafter.
The third option – seeking to influence policy– could be seen to challenge Putin’s long-standing
stricture to the oligarchs: stay out of politics. Putin listens to business voices and maintains close ties
with many oligarchs. The latter have been careful not to express views that differ from clear policy
priorities. But for the first time, a critical mass may become motivated to press for important change.
This prospect has been raised before. Soon after the annexation of Crimea, influential public
voices began calling into question oligarch loyalties, arguing that their foreign interests led them to
advocate a more accommodating course towards the West. Putin’s “de-offshorisation” campaign was
motivated by such concerns.58 Possibly in reaction, some of the oligarchs closest to Putin have loudly
declared their loyalty to the Russia state.59 Kremlin and oligarchs alike argue that sanctions are
designed to create a split between them – while insisting that any such attempts will fail.60
53 Vedomosti (2018d).
54 Daily Telegraph (2018).
55 In Albert Hirschman’s classic analysis of responses to organisational decline, these three approaches represent,
respectively, exit, voice and loyalty. For a thoughtful use of this schema to analyse Russian elite options, see Markus
(2017).
56 Russian investment in Singapore and Hong Kong totals about $2bn, comparable with that in Berduda alone. Vedomosti
(2018b). Anti-corruption drives are reportedly making China an unattractive destination.
57 Rusal’s share price in Hong Kong as well as London has been hit by sanctions.
58 See, for example, the views of influential “Eurasianist” ideologist Aleksandr Dugin. Dugin (2014).
59 For example, long-standing Putin associate Yuri Kovalchuk declared that Russia had a “nationally oriented elite” that
knew “what side of the barricades it was on”, while asking those with property abroad “where is your home?” Financial
Times (2018c).
60 See, for example, the comments of Putin’s presidential press spokesman in Vedomosti (2017). See also those of
sanctioned oligarch Farkhad Akhmetov in RBK (2018a).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
18
BOFIT Policy Brief 8/2018
www.bofit.fi/en
But overt public loyalty is to be expected. None dares criticise the president – though as noted
earlier, major Russian businesses have vigorously, and successfully, lobbied against draft Duma
“counter-sanctions”. The real question is whether Russian businesses have the power, as well as
motivation, to influence the policies that harm it. On this, opinions are sharply divided, even among
those with broadly similar views of Russia.61
While it is too early to offer an answer, we can map out a range of possibilities. The scenario
of elite-driven policy change is merely a possibility, not a prediction. If sanctions are maintained or
strengthened, at least three factors will determine whether they will become politically significant:
how strong oligarchs’ common interests are; how effectively they can co-operate; and how much
power they have to press their preferred policies.
First, Russia’s economic elite is not homogenous and may not share common interests.
Dominated by energy, mining and metals (as well as banks largely built from these sectors) since the
early post-Soviet years, it has seen further sectors – notably property, retail and agriculture – generate
fortunes over the past fifteen years. These sectors are more domestically-oriented and less reliant on
external ties, though they still account for less than a fifth of elite wealth.62
More significant are the varying relationship of oligarchs to politics. In Russia’s patrimonial
state, wealth is at most private, never independent, and always conditional on the approval of power.
As the state has grown under Putin, a larger proportion of Russia’s wealth has come to be held by it,
especially through “silovarchs” with a security or defence background and those with deep personal
ties to Putin. They are more deeply tied to the political power and more intrinsically loyal to the
president.
Second, even if a significant proportion of the business elite recognises a shared interest in the
easing of sanctions, they may find it hard to co-operate in asserting this. Despite the high
concentration of wealth in Russia, they face a collective action problem that deters individual
oligarchs from raising their head above the parapet unless they are confident others will do the same.
As economic problems deepen, a shrinking pie could intensify rivalries. They continue to wage major
legal battles with one another – significantly, in Western (especially British), not Russian, courts.
Even silovarchs with deep ties to Putin may clash with one another. Nor is there a history or culture
of co-operation between oligarchs. Even when far more powerful in the late 1990s, with some
speaking openly of forming a “board of directors” for the country, they feuded bitterly in the
“bankers’ war”.63
Third, even if oligarchs wish to concert their interests to achieve policy change, they may lack
the power to do so. Russia’s economic elite may be just too weak and state-dependent. In his first
presidential term (2000-04), Putin gained dominance over the oligarchs remarkably quickly,
imprisoning and exiling those who resisted him and cowing the rest. Since then, officials who have a
security background, or are old associates of Putin’s (or both) have been promoted across all
institutions, including the business world, while the state’s role in the economy has also grown. As a
consequence, business leaders enjoy less autonomy and influence than at any time since a market
economy began to emerge in the early 1990s. This implies that they may come to the state as
supplicants for compensation and protection from sanctions, but will not seek to change Russia’s
underlying policies (let alone government), however strongly motivated to do so.
61 Compare, for example, Bill Browder’s comments in Reuters (2017a) with those of Shevtsova (2018).
62 According to Forbes Russia 2018, the richest 50 Russian businesspeople have at total of $342bn, only 17% of which is
not obviously linked to energy, metals, mining or finance. For a recent discussion of the changing composition and
fortunes of the wealthiest oligarchs, see Treisman (2016).
63 For example, at the time of the Salisbury nerve agent attack, Vladimir Potanin, Oleg Deripaska and Roman Abramovich
were fighting in a London court over shareholdings in Norilsk Nickel. For an example of conflict between two silovarchs
and old Putin associates, Igor Sechin’s reported ambition to acquire the Novorossisk port pits him against Transneft and
its CEO Nikolai Tokarev. On the “bankers’ war”, see Hoffman (2002).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
19
BOFIT Policy Brief 8/2018
www.bofit.fi/en
But it is worth considering how far any state can go in neglecting the interests of a large number
of private wealth owners. All politics, not only in Russia, is based on elite networks. As Henry Hale
has shown, major political upheaval in post-Soviet countries has repeatedly taken place when (and
only when) a critical mass of elites no longer believes the leader is able to protect their interests.
These moments have occurred, almost without exception, around national elections, however
imperfectly conducted, when the leader is no longer able to stand.64 Such a view implies that, if
sanctions are maintained, and even more if they are intensified, then deepening concern among
oligarchs could crystallise into the goal of influencing the post-2024 transition – when, under the
present constitution, Putin is obliged leave the presidency.
There are other variables to consider, not least how Putin will try to resolve the “2024
question”.65 It is worth asking, too, whether recent personnel changes to governorships, state
companies, and other bodies reflect confidence, or its absence, that the elite will remain cohesive and
loyal.
The implications of sanctions for elite interests and thus for elite-state relations is a critical
question that awaits an answer. What is clear, though, is that a critical mass of major Russian wealth
holders faces a new, discomfiting uncertainty and difficult choices. The security provided to Russian
wealth by the West – which compensated for its absence in Russia – can no longer be relied on. It is
hard to overstate how important this security has been. In effect, Western jurisdictions became part
of the Russian system, providing essential functions that stabilised state-elite relations within Russia.
For the first time, the West has begun to call this arrangement into question.
In this context, it is worth reflecting on predictions sometimes made by Western commentators
in the 1990s that new private wealth owners would demand institutions to stabilise and protect their
assets. The implication was that we need not worry too much about how this wealth was acquired:
the very fact of private property would generate an endogenous demand for the rule of law. This
argument was a political-economic twist on Mandeville’s adage that private vice leads to public
virtue. Speculative rather than empirical, it has not aged well. One important reason is that wealthy
Russians simply outsourced wealth protection to the West, so retaining the best of all worlds:
privilege in Russia’s rule-of-relationships and protection under the West’s rule of law.
How will elites respond if this regulatory arbitrage becomes unfeasible? At the very least, and
however reluctantly, they will be incentivised to take a closer interest in how institutions work and
key decisions are made, especially if they repatriate assets to Russia.
6. Conclusions
Let us revisit the two questions posed at the outset. How should we evaluate the effectiveness of
sanctions? How effective are they, and are likely to be in the future?
Sanctions are one foreign policy instrument among many. We should not devise more
demanding tests for them than for others, nor simply ask whether “sanctions work”. We do not ask,
in such a general way, whether or not war, military intervention, international organisations,
ministerial statements or other foreign policy tools “work”. In each case, we judge how effectively a
given instrument supports which goals under what conditions.
Sanctions are no different. We should evaluate them by how far they have achieved their stated
aims, given the conditions in which they are used. In the case of Russian sanctions, this means asking:
64 See Hale (2015) and Hale (2017).
65 Putin’s options are: to leave the presidency but retain de facto power (as in 2008); change the constitution to remain
president (an option he has previously rejected); or to leave power entirely.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
20
BOFIT Policy Brief 8/2018
www.bofit.fi/en
how far have these encouraged Russia towards a political settlement of the conflict in Ukraine,
deterred military escalation, and reaffirmed international norms – given Russia’s uniquely
challenging characteristics as a sanctions target?
So far, sanctions have played an important role both in deterring military escalation and
reaffirming international norms. They have not, though, induced Russia to reach a political settlement
(specifically, implementation of the Minsk agreements). It appears that maintaining influence and
controlled instability in Ukraine are too important to Russia for the current costs of sanctions to shift
its behaviour. While sanctions have curbed escalation, they have not moderated policy (let alone
reversed it, always the most difficult goal, and one not attempted by current sanctions).
This real, if incomplete, success is notable. It has been achieved despite the correlates of
sanctions success, derived from study of many other cases, predicting failure. The speed of this
success is also striking. Sanctions often take years, even decades, to produce significant results. And
the impact of sectoral sanctions, compounded by the second-order effects of Russia’s response to
them – adaptation, evasion, avoidance and retaliation – will continue to grow with time. They will
cause Russia to fall further behind the rest of the world, and to foster closer ties with China on
relatively less favourable terms.
This is a scenario of erosion, not implosion. In the past decade, Russia has shown it is large
enough to pay the high opportunity costs of authoritarian statist rule. As long as Russia avoids a
systemic financial crisis – and the lessons of 1991, 1998 and 2008 are deeply ingrained in policy –
the current regime will find these costs tolerable. But erosion can have major political consequences.
Over the coming decade, chronic relative decline, accelerated by sanctions, may deepen
dissatisfaction with the status quo.
But the newest sanctions and standards, targeting oligarchs, could prove the most potent. By
depriving wealthy elites of asset security and global financial access, they have the potential to disrupt
Russia’s political economy – the balances of interest between state and business, and among elite
factions that, while never wholly stable, has underpinned the Putin presidency until now.
This remains speculative territory. While the effects of sanctions on oligarchs may be traced,
their influence on oligarch behaviour, and thus on political outcomes, is harder to predict. This will
shape, and be shaped by, dynamics of Russian elite politics that can be obscure even to the
participants. It is too soon to tell – the new sanctions and standards are only a few months old – and
we should not push the evidence further than it can go. But two conclusions are already clear. First,
these sanctions are an unprecedented adverse development for targeted oligarchs, one that presents
them with unfamiliar and difficult choices. Second, there is much potential for applying wider and
more rigorous international sanctions and standards to Russian (and other) economic elites.
Finally, two broader conclusions for evolving sanctions practice emerge from the experience of
imposing sanctions on Russia. First, while as noted earlier the orthodox advice on sanctions tempo is
“slam hammer, don’t turn the screw”, a combination of both can be effective. The April 6 American
SDN measures are “slamming the hammer” by demonstrating the ability to isolate individuals and
their business empires with financial sanctions, while U.S. and EU sectoral sanctions are “turning the
screw” by depriving key sectors of the finance and (especially) technology needed for future
development.
Second, this experience continues a longer-term trend in sanctions design away from traditional
trade embargos and towards financial restrictions. The latter predominate in Western measures
against Russia, while few trade restrictions have been applied.66 Conversely, Russia’s own trade-
restricting counter-sanctions have failed to achieve their goal of undermining Western unity and
resolve.
66 Apart from preventing the transfer of technology, the main restriction is the banning of trade with Crimea and
Sevastopol.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
21
BOFIT Policy Brief 8/2018
www.bofit.fi/en
References
Bershidsky, Leonid (2018). “A Russian Business Icon Sells Out to the State”, Bloomberg, 16 February
2018.
Biersteker, Thomas and Peter A.G. van Bergeijk (2015). “How and When do Sanctions Work? The
Evidence” in On target? EU Sanctions as security policy tools, European Union Institute for
Security Studies Report no. 25 – September 2015.
Bloomberg (2014). “U.K. wants EU to Block Russia from SWIFT Banking Network”, 30 August
2014.
Christie, Edward Hunter (2016) The Design and Impact of Western Economic Sanctions against
Russia, The RUSI Journal, 161:3.
Daily Telegraph (2018).“List reveals self-exiled Russians in London seeking to return home”, 7
February 2018 https://www.telegraph.co.uk/news/2018/02/07/list-reveals-self-exiled-russians-
london-seeking-return-home/.
Dugin, Aleksandr (2014). “Shestaya Kolonna”, Vzglyad’, 29 April 2014.
Financial Times (2017). “Russian companies retreat from London stock market”, March 16, 2017
https://www.ft.com/content/e5c60ae2-0997-11e7-97d1-5e720a26771b.
Financial Times (2018a). Putin considers ‘cryptorouble’ as Moscow seeks to evade sanctions”,
January 2, 2018 https://www.ft.com/content/54d026d8-e4cc-11e7-97e2-
916d4fbac0da?segmentId=6132a895-e068-7ddc-4cec-a1abfa5c8378.
Financial Times (2018b). “Londongrad oligarchs are being forced back to Russia’s embrace”, June
1, 2018 https://www.ft.com/content/35843d8e-6580-11e8-90c2-9563a0613e56.
Financial Times (2018c). “UK overseas territories to open up ownership registers”, May 1 2018
https://www.ft.com/content/5a924560-4d45-11e8-8a8e-22951a2d8493.
Fischer, Sabine (2017). “A Permanent State of Sanctions?” SWP Comment 2017/C, Stiftung
Wissenschaft und Politik April 2017 https://www.swp-berlin.org/en/publication/eu-russia-a-
permanent-state-of-sanctions/.
Gaidar, Yegor (2007). Collapse of an Empire. Lessons for Modern Russia (Washington DC:
Brookings Institution, 2007).
Global Witness (2018). “Missing the Bigger Picture? Russian Money and the UK’s Tax Havens”,
April 2018.
Granville, Brigitte and Vladimir Mau (2018). “Putin’s Economic Dilemma”, Project Syndicate, 15
June 2018 https://www.project-syndicate.org/onpoint/putin-s-economic-dilemma-by-brigitte-
granville-and-vladimir-mau-2018-06.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
22
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Gurvich, Evsey (2018). “Kak pravil’no i nepravil’no otvechat’ na sanktsii”, Vedomosti, 16 May
2018.
Hale, Henry E. (2015). Patronal Politics: Eurasian regime dynamics in comparative perspective
(New York: Cambridge University Press, 2015).
Hale, Henry E. (2017). “Russian Patronal Politics Beyond Putin”, Daedalus, Spring 2017.
Hedberg, Masha (2018). “The target strikes back: explaining countersanctions and Russia’s
strategy of differentiated retaliation”, Post-Soviet Affairs 34:1.
Hoffman, David E. (2002). The Oligarchs: Wealth and Power in the New Russia (PublicAffairs:
New York, 2002).
Hufbauer, Gary Clyde, Jeffrey J. Schott, Kimberly Ann Elliott, and Barbara Oegg (2008). Economic
Sanctions Reconsidered, 3rd edn. (Peterson Institution, 2008).
IMF (2017). Russian Federation Staff Report for the 2017 Article IV Consultation, IMF Country
Report No. 17/197.
IMF (2018), World Economic Outlook, April 2018
https://www.imf.org/en/Publications/WEO/Issues/2018/03/20/world-economic-outlook-april-
2018#Statistical%20Appendix.
Interfax (2018). “Patrushev zayavil o problemakh v energetike iz-za otsutsviya dostupa k
inostrannym tekhnologiyam”, 3 August 2018 http://www.interfax.ru/russia/623771.
Kommersant (2018) “Na sanktsii otvetyat po punktam”, 19 July 2018.
Korhonen, Iikka, Heli Simola and Laura Solanko (2018). “Sanctions, counter-sanctions and Russia
– Effects on economy, trade and finance”, BOFIT Policy Brief 2018 No. 4.
Markkus, Stanislav (2017). “The Atlas That has Not Shrugged: Why Russia’s Oligarchs are an
Unlikely Force for Change” Daedelus, Spring 2017.
Perlow, Gary H. (1983). “Taking Peacetime Trade Sanctions to the Limit: The Soviet Pipeline
Embargo”, Case Western Reserve Journal of Law 15:2.
Putin, Vladimir (2018). “Presidential Address to the Federal Assembly”
http://en.kremlin.ru/events/president/news/56957.
RBK (2018a). “Figurant kremlevskogo doklada nazval tsel’yu raskol rossiiskoi elity”, 30 January
2018 https://www.rbc.ru/business/30/01/2018/5a70b1c19a794777649e0b91.
RBK (2018b). “MER predlozhilo ne raskryvat’ danniye o sdelkakh krupnykh predpriyatii” RBK, 9
June, 2018
https://www.rbc.ru/economics/09/06/2018/5b1a7a199a794721d5523982?from=center_1.

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
23
BOFIT Policy Brief 8/2018
www.bofit.fi/en
Reuters (2016). “How EU firms skirt sanctions to do business in Crimea”, September 21, 2016
https://uk.reuters.com/article/uk-ukraine-crisis-crimea-sanctions-insig/exclusive-how-eu-firms-
skirt-sanctions-to-do-business-in-crimea-idUKKCN11R1AL.
Reuters (2017a). “Kremlin foe Bill Browder tells West: money is Putin’s Achilles heel”, June 15,
2017 https://www.reuters.com/article/us-russia-sanctions-browder/kremlin-foe-bill-browder-tells-
west-russian-money-is-putins-achilles-heel-idUSKBN1JB0E7.
Reuters (2017b). “Despite new U.S. sanctions, Russian oil traders say it’s business as usual”,
August 29, 2017 https://www.reuters.com/article/us-usa-trump-russia-sanctions/despite-new-u-s-
sanctions-russian-oil-traders-say-its-business-as-usual-idUSKCN1B9143.
Reuters (2018a) “Exxon quits some Russian joint ventures citing sanctions”, March 1, 2018
https://www.reuters.com/article/us-exxon-mobil-russia-rosneft-oil/exxon-quits-some-russian-joint-
ventures-citing-sanctions-idUSKCN1GC39B.
Reuters (2018b). “Dutch firms probed for alleged breaches of EU sanctions on Russia”, May 4,
2018 https://www.reuters.com/article/us-russia-netherlands-sanctions/dutch-firms-probed-for-
alleged-breaches-of-eu-sanctions-on-russia-idUSKBN1I5201.
Reuters (2018c). “Russia’s Renova gets credit line from Promsvyazbank”, May 14, 2018
https://af.reuters.com/article/metalsNews/idAFL5N1SL6U0.
Reuters (2018d). “Russian state reinsurer shoulders more risk after U.S. sanctions”, June 15, 2018
https://www.reuters.com/article/us-russia-sanctions-insurance/russian-state-reinsurer-shoulders-
more-risk-after-u-s-sanctions-idUSKBN1JB1RB.
Sanchez-Sibony, Oscar (2014). Red Globalization: The Political Economy of the Soviet Cold War
from Stalin to Khrushchev (Cambridge University Press, 2014).
Schelling, Thomas C. (1966). Arms and Influence (New Haven: Yale University Press).
Secrieru, Stanislav (2015). “Have EU sanctions changed Russia’s behaviour in Ukraine?” On
target? EU Sanctions as security policy tools, European Union Institute for Security Studies Report
no. 25 – September 2015, p. 41.
Shevtsova, Liliya (2018). “SSHA reshil podvesit poruchentsev Kremlya”, Liga.net, 7 April 2018
http://www.liga.net/politics/interview/liliya-shevtsova-kreml-ne-gotov-idti-na-popyatnuyu.
Skadden (2015). “Sectoral Sanctions Add New Layer of Complexity to OFAC Sanctions”, January
2015 https://www.skadden.com/insights/publications/2015/01/sectoral-sanctions-add-new-layer-of-
complexity-to.
Time (2018). “Exclusive: Russia Secretly helped Venezuela Launch a Cryptocurrency to Evade
U.S. Sanctions”, March 20, 2018 http://time.com/5206835/exclusive-russia-petro-venezuela-
cryptocurrency/.
Treisman, Daniel (2016). “Russia’s Billionaires”, American Economic Review: Papers &
Proceedings 2016, 106(5).

Nigel Gould-Davies
Economic effects and political impacts:
Assessing Western sanctions on Russia
Bank of Finland / Institute for Economies in Transition
24
BOFIT Policy Brief 8/2018
www.bofit.fi/en
UN Targeted Sanctions Consortium (2013). “The Effectiveness of United Nations Targeted
Sanctions: Findings from the Targeted Sanctions Consortium”
https://repository.graduateinstitute.ch/record/287976/files/effectiveness_TCS_nov_2013.pdf.
U.S. Treasury (2018). “U.S. Treasury Designates Russian Oligarchs, Officials, and Entities in
Response to Worldwide Malign Activity”, April 6, 2018 https://home.treasury.gov/news/press-
releases/sm0338.
Vedomosti (2017). “Peskov oproverg nedovol’stcvo elity Putinym”, 30 November 2017.
Vedomosti (2018a). ”Sanktsii pustili na organy”, 19 April 2018.
Vedomosti (2018b). “Kuda vedet raskrytie ofshorov”, 15 May 2018.
Vedomosti (2018c). “Analitiki TsB podschitali raskhody naseleniya na podderzhku agrariev”,
Vedomosti, 5 June 2018.
Vedomosti (2018d).”Chto skazal Putin na pryamoi linii. Glavnoye”, 7 June 2018.
Vedomosti (2018e). “Vitse-premier rasskazal o vlianii sanktsii na gosoboronzakaz”, 22 June 2018.
Vedomosti (2018f). “Oleg Deripaska otkazalsya ot pomoshchi Promsvyaz’banka”, 29 June 2018.
Vedomosti (2018g). “SMI soobshchili ob utverzhdennom Silyuanovym plane borb’by s
sanktsiyami”, 19 July 2018.
Vedomosti (2018h). “V MinFin poyavitsya department po protivodeistviyu sanktsii”, 20 July 2018.
Washington Post (2018). “Who is Viktor Vekselberg, the Russian billionaire linked to Michael
Cohen?” May 9, 2018, https://www.washingtonpost.com/world/who-is-viktor-vekselberg-the-
russian-billionaire-linked-to-michael-cohen/2018/05/09/1857f5a8-5391-11e8-a551-
5b648abe29ef_story.html?utm_term=.6a336e82c5f6.
Zarate, Juan Treasury’s War: The Unleashing of a New Era of Financial Warfare (New York:
PublicAffairs, 2013).

BOFIT Policy Brief https://www.bofit.fi/fi/julkaisut/policy-brief/
2015
No 1 Alexey Kudrin and Evsey Gurvich: A new growth model for the Russian economy
No 2 Heli Simola: Venäjän valuuttavaranto ja rahastot
No 3 Stephan Barisitz and Zuzana Fungáčová: Ukraine: Struggling banking sector and substantial political and economic uncertainty
No 4 Heli Simola: Russia's international reserves and oil funds
No 5 K.C. Fung, Alicia Garcia-Herrero and Jesus Seade: Beyond minerals: China-Latin American Trans-Pacific supply chain
No 6 Anni Norring: Suomen ja Venäjän välisten suorien sijoitusten tilastot
No 7 Vesa Korhonen, Zuzana Fungáčová, Laura Solanko, Iikka Korhonen ja Heli Simola: BOFIT Venäjä-tietoisku 2015
No 8 Yang Yao: When are fixed exchange rates an appropriate policy tool for growth?
No 9 Heli Simola: Rebalancing of demand in China – illustrating possible effects with an input-output analysis
No 10 Iikka Korhonen: How fast can Russia grow?
No 11 Jouko Rautava, Riikka Nuutilainen, Anni Norring, Iikka Korhonen ja Jyrki Kallio: BOFIT Kiina-tietoisku 2015
2016 No 1 Riku Niemi: The Eurasian Union – much potential, little results
No 2 Andrei Yakovlev: What is Russia trying to defend?
No 3 Andrei Yakovlev, Lev Freinkman and Anton Zolotov: Domestic and external factors in the development of Russia’s economic
think tanks sector
No 4 Mikko Mäkinen: Nowcasting of Russian GDP growth
No 5 Iikka Korhonen, Tuomas Forsberg, Vesa Korhonen ja Heli Simola: BOFIT Venäjä-tietoisku 2016
No 6 Heli Simola: Economic relations between Russia and China – Increasing inter-dependency?
No 7 Ivan Lyubimov: Are educational reforms necessarily growth-enhancing? Weak institutions as the cause of policy failure
No 8 Laura Solanko: Opening up or closing the door for foreign trade – Russia and China compared
No 9 Heli Simola ja Vesa Korhonen: Arktisen alueen taloudellinen merkitys Venäjälle
No 10 Masaaki Kuboniwa: Estimating GDP and foreign rents of the oil and gas sector in the USSR then and Russia now
No 11 Masaaki Kuboniwa: Considerations on new Rosstat data on the contribution of Russia’s military goods sector to GDP growth in
recent years
2017 No 1 Jouko Rautava: Kiinassa talouspolitiikka ei pysy maan muutosten vauhdissa
No 2 Heli Simola: China’s growing role in global production boosted by strong competitiveness – evidence from international input-output
tables
No 3 Heli Simola ja Laura Solanko: Katsaus Venäjän öljy- ja kaasusektoriin
No 4 Heli Simola: Chinese production chains rely increasingly on domestic services
No 5 Heli Simola and Laura Solanko: Overview of Russia’s oil and gas sector
No 6 K.C. Fung, Nathalie Aminian, Iikka Korhonen and Keith Wong: The Chinese yuan: Influence of interest groups examined
No 7 Päivi Määttä: Meeting the challenges of impact measurement
No 8 Caroline Stern, Mikko Mäkinen and Zongxin Qian: FinTechs in China – with a special focus on peer to peer lending
No 9 Iikka Korhonen and Riikka Nuutilainen: Breaking monetary policy rules in Russia
No 10 Andrei Yakovlev, Lev Freinkman, Sergey Makarov and Victor Pogodaev: In response to external shocks: How advanced
Russian regions react to changes in federal policies – Experience of Tatarstan
2018 No 1 Ivan Lyubimov and Maria Lysyuk: Schooling ain’t learning in Russia either: High level of student employment as an indicator for slow
human capital accumulation
No 2 Jouko Rautava: Intian nopea kasvu ei vähennä reformien tarvetta
No 3 Eeva Kerola: Hongkongin talous on vahvasti kytkeytynyt Manner-Kiinaan
No 4 Iikka Korhonen, Heli Simola and Laura Solanko: Sanctions, counter-sanctions and Russia − Effects on economy, trade and finance
No 5 Andrei Yakovlev, Lev Freinkman and Nina Ershova: Channels of dialogue between international businesses and national
governments: The implications for domestic reforms and international relations in the case of Russia
No 6 Helmut Wagner: Structural change, rebalancing, and the danger of a middle-income trap in China
No 7 Wing Thye Woo: A U.S. perspective on China’s external economic disputes in the past 40 years and in the coming 40 years
No 8 Nigel Gould-Davies: Economic effects and political impacts: Assessing Western sanctions on Russia
http://www.bofit.fi • email: bofit@bof.fi
ISSN 2342-205X